School of Business 11/10/2012

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Russ and John present the show that champions those who make it all happen. It’s the entrepreneurs and the innovators who create the jobs that make taxpayers. WE LOVE THESE PEOPLE!! Includes: The BusinessMakers Quote of the Week— a clever truism from American journalist George Will; This Week in Business History includes such innovation as life preservers made of cork, the safety razor, and Route 66; and the Jargon Challenge Round—trendy technospeak that YOU should know.

Full Interview text

Russ: This is the Businessmakers Show, heard on the radio and seen online at thebusinessmakers.com. This is episode number 388 of that show that champions knows that make that it happen.

John: That's right. These are the people who create things, who build and distribute and sell products that people want, products that really change people's lives. If you look at some of the products in the past couple of years that have come out of the Apple Corporation or just about any company you can think of, there's been plenty of innovation there and creativity.

Russ: Absolutely, and lots of jobs.

John: Oh, yeah, well that goes without being said, just between you and me.

Russ: Yeah, and lots of taxpayers.

John: Yeah, right, I mean the taxes are collected and misspent when they get to the government.

Russ: Right.

John: I mean, who could want anything better than that, you know.

Russ: Right. Oh, and there's also lots of other companies that were created that supply companies like Apple.

John: That's right. Yeah. You know, most of the companies that service big companies are mid-sized to small businesses and those big companies, there's only so many of them around, right. That's why they're called the Fortune 500, there's 500 of them.

Russ: That's right. There's 500 of them still to this day.

John: That's it, still to this day. There's other big companies other than what's on the 500 but the employee bases of those companies really drop precipitously as you go down the roster. Especially in most cities, you know, there's a handful companies that are kind of dominant and everybody else is mid-sized to small businesses.

Russ: Yeah. But then some of those mid-sized to small business ones that were suppliers grow.

John: Of course they do.

Russ: They make the Fortune 500, and then they create more - it's kind of sounding like trickle-down economics.

John: That's right, and that term is derided but if you'll just think about anything, let's say you buy an expensive automobile, well, blue-collar workers make that automobile.

Russ: Yeah. Tire companies.

John: Tire companies, the people who make the tires, the people who take that car and take it to the dealership, the guys that prepare the car for sale.

Russ: The guys that wash the cars.

John: The guys that wash, I mean, and you can't tell me that's not trickle-down.

Russ: That's right.

John: I mean, it all flows from retail.

Russ: That's what we should call it - flow-down.

John: Flow-down, yeah.

Russ: There was always a problem with that verb "trickle." Trickle implies that it's just dripping.

John: It kind of gets into, you know, another way of looking at it is the top 1%, every time they spend a dollar, that gets into the capillaries of the society and that goes somewhere.

Russ: Right. Yeah. No, it does.

John: And it usually goes down into the lower, the middle- to the lower-class, economically-speaking, and the same thing what goes to smaller businesses, to smaller companies who in turn become big themselves if they don't go out business or get bought out or what have you.

Russ: Right. Now there's also trickle-down government - or maybe "trickle" isn't the right verb there either - trickle-down bureaucracy, you know. You hardly ever see those things. There's trickle-down entitlements.

John: Well, there's trickle-up thievery.

Russ: Trickle-up - now we're talking. Now we're talking.

John: Yeah. That's when they take money that's not theirs and confiscate it by coercion or whatever, and then they take that money and jam it - it's called jamming - down and give it to people who really didn't have anything to do with that money except receive it and complain that it's not enough. I'm not saying everybody does that but you hear it a lot.

Russ: We've painted a much completer picture today, more complete actually, is the way I should say it. You know, you have trickle-down, you have flow-down, and you have trickle-up, and you have cram-down.

John: Cram-down, yeah, yeah, right.

Russ: So I don't know where that leads us but I can tell you who's on the show today.

John: It doesn't really trickle up, I mean, it's more of a shooting compressed air and then it just phlew!

Russ: All right. Economics 101 right here from the Businessmakers Show.

John: Yeah, right. I don't know how else to put it.

Russ: Yeah, I know. But what we do do here is we interview --

John: Yeah, what do we do? I lost track.

Russ: We interview people that make that make it happen, we're talking about the entrepreneur class, and we're going to get into some interesting categories today. First up, doing business in Africa because the guest will be Robert Scharar, the President of the FCA Corporation. He's been doing 20 years of investing in Africa and he calls Africa "the new Asia." You know, another neat thing about capitalism is that it sort of takes countries that are kind of low-cost producers because they're behind and energizes them significantly, and I think Africa has a lot, now we're talking mainly the southern part of Africa. They've still got some problems up there in the north side, don't they?

John: I would say so, yes.

Russ: Yes they do.

John: You never know when that next insurrection's coming around the bend.

Russ: That's right, but when you kind of get particularly down in South Africa, but you get into the mid, to the equator and down, and even the equator-above there some so this is going to be real interesting, and then that's going to be --

John: Of course, you can always be eaten by a lion.

Russ: Yes, you can. They've got some other problems. When they say ____ _____ ______. [Crosstalk]

John: You know, you have a successful day, you decide to go outside and catch a breath of fresh air, and the next thing you know no one can find your remains except there's a lion there laying down sleeping, licking his chops.

Russ: That's right. All right, but that's not our only topic today because also we have the Professor of Materials Chemistry from MIT. We're talking about Dr. Don Sadoway, and he's going to be talking about his liquid metal battery. Now, you and I always lament some of this alternative energy because the sun doesn't shine all the time that you need electricity and the wind doesn't blow exactly when you need that electricity. Well, Dr. Sadoway's liquid metal battery just might solve that problem. Now people have been trying to solve storage on the grid for quite some time with batteries. He's probably the first guy that's looked at it economically and said, "Wait a minute. We can't have a million-dollar battery out here capturing 50-cent electricity. It doesn't make sense." So he looked at it from a business person's perspective and I think he might have something here.

John: Okay. All right.

Russ: But first - that's right, it's time for the Businessmakers School of Business, and even though we've already had our economics lesson for today there's still other areas of curriculum that we hope will inspire you to move forward in your business life.

John: We do the best we can.

Russ: Yes, we do.

John: This is called trickle-down knowledge. We speak and you're supposed to listen and take this information and use it to improve your life.

Russ: That's right.

John: Okay, and particularly when ____ _____ _____ all about, right?

Russ: That's right. That's exactly what it's about. And we kick it off each week with a quote of the day.

John: Quote of the day.

Russ: Today's quote comes from George Will. I think it's the first time we've ever quoted from him.

John: Yeah, yeah, yeah.

Russ: You can't argue with this one no matter what side of the aisle you sit on. "The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised!"

John: That's right.

Russ: Pretty cool. So there is an argument for being pessimistic.

John: Yeah, right. But you don't want everybody being pessimistic.

Russ: No, you just want you to be it, you know.

John: Yeah, you can be pessimistic but you don't want anybody else to be pessimistic.

Russ: That's right. All right, and that brings us to this week in Business History, so what happened during this sort of mid-November week in business history, John?

John: Wow. This week in business history, 1793, the first mayor of Paris, Jean Sylvain Bailly - B-A-I-L-L-Y - the first mayor of Paris is guillotined. Now he was the mayor of Paris from 1789 to 1791 and was guillotined during the Reign of Terror.

Russ: Now is he the first mayor to be guillotined or was he the first mayor and he was guillotined?

John: It's the first mayor of Paris to be guillotined, yeah, and I've been over there. I don't know whether you've been to Paris or not.

Russ: Yeah, I've been there. I've been there.

John: Yeah, well there was a riot there at the Champ de Mars and he had got unpopular because of that, because he dispersed the national guard out there to kill everybody and arrest them or whatever, he did not survive.

Russ: He did not survive the guillotine cutting his head off?

John: No, he did not, and the thing is, you know, there's revolutions like we had, the American Revolution, where we did throw off the yoke of the British government but we didn't return to a mob mentality.

Russ: Right. We were civilized after we did it.

John: That's right, yeah. Okay. This week in business history, in 1841, life preservers made of cork were patented by Napoleon Guerin, another Frenchman, look at that, okay, who obviously survived the Reign of Terror.

Russ: Yeah, with his life preserver.

John: With his life preserver, that's why, cork, and who would have thought cork would float? I mean, they were probably using cork for a long time. He must have gotten the idea, "Hey, this thing can save your life."

Russ: Yeah, okay. Great.

John: This week in business history in 1896, a power plant at Niagara Falls begins operation, hydro-electric power.

Russ: You can't argue against hydro-electricity, can you?

John: No.

Russ: And now there's some kayakers that don't like the dams.

John: Well, that's too bad.

Russ: Okay.

John: But the thing is, you know, if you put all these dams, the water backs up and a lot of people have to move and all that stuff.

Russ: Yeah, that's not good, but it does create some good fishing spots.

John: It does, yeah.

Russ: And in America, those people, because of eminent domain, supposedly get just compensation for their loss. In China, they just pick you up and move you somewhere. There's no eminent domain.

John: Well, I think they just unmoved you. You've got to find where you land. They just take you off from where you've been.

Russ: Yeah, right, it's up to you to be, yeah, where you end up.

John: Okay. This week in business history in 1904, the internal combustion engine is patented by J.F. Durier of Springfield, Massachusetts.

Russ: That's incredible.

John: And the safety razor was patented by King C. Gillette.

Russ: On the same day?

John: The same week.

Russ: That's amazing.

John: I know.

Russ: Yeah, woo!

John: And those things are still in operation today, the safety razor as well as - because before then it was a blade, just a plain old blade.

Russ: Yeah. Now there are people who lament the internal combustion engine. They say, "Hey, we're dealing with 100-year-old technology," and we are but we've improved it quite a bit, but it was quite an invention at the beginning.

John: Some people think it's more dangerous to society than the nuclear bomb.

Russ: Yeah, they do. They do.

John: Which, you know, what have they been smoking? Okay. This week in business history, 1926, U.S. Route 66 is established in 1926, and then I guess about 40 years later or 30 years later --

Russ: Todd and Buzz.

John: -- they make a TV, Todd and Buzz, discover Route 66, and they found out that there was a high concentration of people who needed help along Route 66.

Russ: There were so many that they started veering off of Route 66 and finding more.

John: And since there were no government stimulus funds to help these people, it was up to Todd and Buzz --

Russ: In their Corvette.

John: -- in their Corvette to go help them.

Russ: Route 66 was such a highway, though. I recently visited part of the old highway and had my photo taken there.

John: You did?

Russ: Yeah.

John: Where, on the highway?

Russ: Yeah. I think I was right outside of Flagstaff, Arizona.

John: In Winslow, Arizona?

Russ: Well, yeah, in Winslow as a matter of fact.

John: It's such a fine place to be.

Russ: Yeah, yeah, it sure was.

John: "There's a girl, my lord, in a flatbed Ford, turning around to have a look at me."

Russ: "in a flatbed Ford, turning around to have a look at me."

John: All right, where were we here? Okay, this week in business history in 1947, the Soviet Union completes the development of the AK47, one of the first assault rifles.

Russ: Well, and it's still extremely popular and effective, and I think the real assault people, the real weaponry people, will admit that it has exceeded most everything that we've tried to develop.

John: Yeah, well, because we came out with the M14 and the M16 and that really was not as effective a weapon.

Russ: Nor as reliable, I think.

John: Right, initially, but I think with the stuff we've got now.

Russ: Maybe.

John: It far outpaces.

Russ: Maybe. The one good thing, though, the Soviet Union, not that they were a capitalistic society at all, capitalism played a role, it might be the black market, and AK47s are everywhere.

John: They're everywhere, yeah. There's one under the table.

Russ: That's right. That's great.

John: Someone sent it to me to welcome me into my new office space.

Russ: That's great.

John: All right. This week in business history in 1951, direct-dial coast-to-coast telephone service begins in the United States.

Russ: Wow.

John: Wow. That's pretty amazing.

Russ: Well where I lived, it didn't show up in 1951. I don't think it showed up until just a few years ago.

John: Well, you were in Sealy, Texas, right?

Russ: Well, no, I was in Seguin, Texas.

John: Seguin, Texas, okay. Well that's like --

Russ: Sealy's a big town compared to Seguin.

John: You would have had to have inter-planetary.

Russ: Right. We were still picking up the phone and saying, "Operator, please dial the Smiths down the street for me."

John: Yeah, right. "Dial it yourself. I'm busy."

Russ: Yeah, right.

John: Okay, all right. Okay, this week in business history in 1969, the National Education Television, predecessor to Public Broadcasting Service in the United States debuts a children's television program, Sesame Street.

Russ: Yeah, with Big Bird, I guess. Isn't that when he was born?

John: Big Bird, yeah, and I'll tell you, that whole empire - not the Public Broadcasting but the Muppet empire --

Russ: Yeah, has done quite well.

John: -- has done quite well, and they should be giving money to PBS.

Russ: Yeah, they should.

John: Instead of the other way around.

Russ: That's a good point, yeah.

John: Some people think that, because I don't think the government should be subsidizing what is essentially an entertainment choice with Public Broadcasting, that I'm against public television and I'm not. I think some of their programming is very good, like Downton Abbey and this Ken Burns documentaries and everything. They're first rate. I think quality programming will always find an audience, and where there's an audience there's money to be made. If they knocked out the 10% of their funding from the government, I'd probably start kicking in something, you know?

Russ: There. Well, there you go. All right.

John: Okay, where are we? This week in business history, 1969, Wendy's Hamburgers opened.

Russ: And where's the beef, eh?

John: Yeah, where's the beef?

Russ: Where's the beef, guys? I'll have a square hamburger.

John: And their first location was on Sesame Street.

Russ: Yeah, for sure.

John: The old man Wendy, he wanted to get his cut. Where's my government subsidy? Okay. This week in business history in 1971, the Japanese company named Busacom wanted to build a new line of calculators and they approached a fledgling American firm Intel, which is short for Integrated Electronics, and asked for a dozen chips, and the rest is history.

Russ: Wow, yeah, the first micro-processor came out of that, so cool. Congratulations to Intel and the Busacom guys. Yeah. There you go.

John: There you go. That just shows you where a good idea will lead you.

Russ: Right. Right.

John: Here's another good idea. This week in business history in 1973, President Richard Nixon authorized his construction of the Alaskan Pipeline.

Russ: Yeah, which brought us a lot of energy over here.

John: That's right, yeah, and not too many animals died, as a matter of fact more animals lived because of that because they could all huddled up around the place where the heat is, you know, in the freezing cold nights.

Russ: Yeah, it's environmental friendly.

John: Environmental friendly. This week in business history in 1977, the one hundredth millioneth U.S.-built Ford rolls off the assembly line. It's a Ford Fairmont 4-door sedan - a pretty good track run, and they're making some decent money right now. Their European division is kind of off the mark but their domestic operations are going pretty strong.

Russ: Yeah, and then they were the American company that didn't take any stimulus or take a loan or anything, right?

John: Yeah, right.

Russ: They said, "Nope, we're a private a company."

John: We're a private, yeah, we're going to get out of this ourselves.

Russ: Right.

John: Okay, this week in business history in 1981, the space shuttle program mission STS, utilizing Space Shuttle Colombia, makes the first time a manned spacecraft is launched into space twice, a reusable vehicle. This week in business history in 1990, Tim Berners-Lee publishes a formal proposal for the World Wide Web.

Russ: Well, that turned out, sort of, don't you think?

John: It did, but I thought Al Gore did that.

Russ: Yeah, right.

John: Maybe that's Al's nom de plume.

Russ: Tim Berners-Lee, yeah.

John: Because a lot of people, you see who the book is authored by, that's usually not their real name.

Russ: Yeah. You probably got that right, yeah.

John: This week in business history in 1997, WorldCom and MCI announced a $37 billion merger, the largest merger in U.S. history at that time, and later became - I think it supplanted Enron as the largest bankruptcy, or one of the largest bankruptcies.

Russ: Yeah. I think the MCI people kind of left that feeling kind of taken to the cleaners on that deal because they had a great company.

John: They did, yeah.

Russ: It didn't look as good as WorldCom because WorldCom had some extraordinary financials.

John: Accounting irregularities.

Russ: Yes, yes.

John: That is, if you buy anything under $5,000 or whatever it is, you cannot log it as a capital expense. You just appreciate it over six years.

Russ: Right.

John: You have to buy it and expense it at the time that you buy it.

Russ: Right, and boy, they just looked good.

John: And old Bernie Ebbers got a little confused there.

Russ: Yeah, he did. He did. All right, that wraps up today's history lesson.

John: Yeah, that's enough, man. What did we do? We started out with the guillotine and started out with a merger that was going to be one of the biggest, resulted in one of the biggest failures in business history.

Russ: No, it was a good, good job, as usual.

John: All right, well, credit to my crack staff.

Russ: There you go. All right. And that brings us to Navigating Business Jargon.

John: Ah yes, yes, the vocabulary lesson.

Russ: Yeah, we pick out - I get to pick out, actually. You don't, I pick it out.

John: Yeah, or make up.

Russ: Yeah, or make up new words, and John is challenged with guessing the meaning right here.

John: Oh, it's a tough world. I know. I know. It's tough.

Russ: Now this is going to be interesting because I've actually done this world before but you were out on assignment and Leisa Holland-Nelson was sitting in and I challenged her.

John: Did she guess it?

Russ: No, she didn't, so you've got a chance to really one-up her here. Are you ready?

John: Sure. Go ahead.

Russ: The word is "uncumbent."

John: Okay, okay. An incumbent is someone who has an office, a position in a company or organization and they --

Russ: Yeah, good so far.

John: -- and they're in the office and filling the position. And uncumbent is someone who's just gotten let go of that position. Instead of an incumbent they become an uncumbent.

Russ: I think I want to give you a win.

John: All right.

Russ: According to this it's a defeated incumbent politician but one might argue that it's a person that's not an incumbent.

John: Yeah, right.

Russ: Although I guess that would be a non-cumbent.

John: An uncumbent.

Russ: No, you've uncumbentized.

John: That's what I said, you're no longer - it's a defeated incumbent.

Russ: Yeah, right. Wow, all right, good job! Congratulations!

John: I didn't even have to hem-and-haw on that one.

Russ: No, you didn't. All right. All right. Wait, wait, b-b-b-before we wrap it up, it's time for the very popular PKF Texas Entrepreneur's Playbook.

John: All right. Here's a guy who never makes a mistake.

Russ: That's right.

John: Okay, here's Greg Price.

Russ: All right, and that wraps up today's School of Business. Stay tuned in for our interview with Robert Scharar, the President of FCA Corp, as he talks about doing business in Africa, followed by an interview with Dr. Don Sadoway, material chemistry professor at MIT, describing his liquid metal battery. This is the Businessmakers Show, heard on the radio and seen online at thebusinessmakers.com.